leader board

Monday, March 31, 2014

Forex Trading Mistakes - Not Being Aware of Humane Nature

 So far, we have learned that trading should be undertaken similarly to any other business. There are losses as in any other business (like inventories not sold), but at the same time, it is also important to understand that trading itself is like no other endeavor. Some attitudes that could have given great results in any other task in life could have disastrous effects when it comes to trading. Some of them are listed below.

Fight! Till the End
Since we were kids, we are all taught to fight as hard as we could and do everything in our hands to achieve the desired results or get what we want.
When it comes to trading, the results could be far different. This is commonly named in the trading environment as “marrying one position”. Once you enter a position, you are convinced that it is a winner. Just as you got in, the trade goes against you and you might think “it has got to go somewhere first”. As it keeps going against you, you are still convinced that the trade is going to be a winner. Then you will probably think “operators or money makers are trying to scare us”. As your trade keeps going against you will keep telling yourself “hold it, hold it”. Then you realize the trade has gone too far. This makes it hard to take the loss, and you will probably say “I will wait to get break even, it probably wasn’t a good trade after all”. And the next thing you know is boom! Margin call....
The best thing to do in order to avoid this happening to us is to follow our trading system. Remember, the first time you violate your rules, could also be the last time you trade.

Trial and Error
This is a common practice in many tasks of life. And often it is the only way to get the desired results. Like in the scientific arena in some of the most important findings, scientists actually weren’t looking for what they found. It was the result of trial and error.
In the trading environment, doing this in a real account, will lead you to wipe out your trading funds. You cannot start trading your real account trying different indicators, patterns or systems to see if it gives you the results you are looking for, or if the system fits you.
You need to find what systems/indicators suit you before and not after you start trading your real account.

Since kids, we were taught that we should try as hard as we could to achieve an A or an A+ (100 or 90%) on our grades. Getting those results was proof that we understood any given subject. And of course some of us got a little present as an incentive to keep trying hard.
In the trading environment, this could give us the wrong idea that having a system that is right 70% of the time is an average system, when in fact is an excellent system.
This kind of thinking could lead us to an eternal search for more accurate systems (the aforementioned Holy Grail).

FACT - These kinds of attitudes might make perfect sense in any other endeavor but they complicate our trading careers. For this reason, we need to open our minds to every possibility, even if it doesn't make sense in other areas.

Success in Forex = Learning + Practicing + Update Knowledge

Saturday, March 29, 2014

Forex Trading Mistakes, Lack of Discipline

Discipline is a very broad word when it comes to trading. But it all comes down to one sentence, if you have the discipline required to be a good trader, your chances of success in this business will get higher, if you don't, you need to work on it so you could reach your trading goals.
It requires discipline to develop your trading system. Most of us are eager to enter a trade when it all begins. But if you don't develop the guidelines to follow on each trade, I am afraid the trading adventure will end sooner than you think. It requires time, effort and hard work to develop the system.
It requires discipline to follow your trading system. As stated before, there are no better decisions than those made by following your system. Take for instance the following scenarios:

1. You followed your system and made a winning trade.
OUTCOME: You will gain confidence in yourself and your system

2. You followed the system and lost the trade.
OUTCOME: Losses are unavoidable, you followed you system and it will give you confidence in yourself, because you know losses are part of this business.

3. You took a trade with no signal from your system and lost.
OUTCOME: You made a mistake and it turned out as a negative experience. You will now think it twice before entering the market with no signal.

4. You didn’t follow your system and didn’t take a signaled trade that turned out a winning transaction.
OUTCOME: Confidence in yourself will drop substantially.
As you can see here, mistakes are to be valued in terms of the decision made, not in terms of the money made or lost. We will develop more on this later on.
Discipline is also required when it comes to your working environment. To establish your working hours, to organize yourself, etc.

FACT - Discipline is a must in the Forex business. We will elaborate further on this subject in the following lessons.

Success in Forex = Learning + Practicing + Update Knowledge

Thursday, March 27, 2014

Forex Trading, Not Using Money Management

 Money Management (MM) is one of the essential parts of trading. The main purpose of MM is to avoid the risk of ruin. The lack of using MM is one of the reasons most traders lose their trading accounts.
MM basically answers the next question: how much to risk on each individual trade? It should not be confused with risk and trade management (pyramiding, scaling out, trailing stops, where to place stops, etc.) MM tells you how big or what size the next trade should be. 

Most traders just focus on the profit side of each trade and totally forget about the risk side. In other words, they think the trade is a winner before placing it, and therefore they do not pay any attention to the consequences a losing trade could produce on your trading account. But remember, every trade is statistically independent from each other. Although the outcome of a series of trades is predictable, there is no possible way to forecast the outcome of each individual trade.
The best systems available are only right around 60 or 70% of the time. For every 10 trades, there is a possibility to have 3 or 4 losing trades. If we don't pay attention to these 3 or 4 trades, we could end up losing month after month, or worse yet, blowing up (losing) our entire account.
We will never know which trade will be a winner and which one a loser, never. So MM should be applied in every single trade, regardless of what you think the outcome of the trade will be.
Even with a system that is right 90% of the time, you could end up broke if you do not apply a sound money management technique.
MM also helps us in the winning side of every trade, when applying MM techniques we could benefit from the geometric growth of our trading account. As your account grows, you will trade larger amounts according to the MM technique applied.

FACT - If you do not have a system that is right 100% of the time you should us Money Management (meaning you should use it because such a system does not exist), regardless of how big or small your trading account is. We will never know the outcome of the next trade, and this one trade could be the last one if you do not apply MM. using MM is not an option, it is a must if you want to achieve your trading goals. You need to do whatever you need to do to be able to trade the next day, week, or year.
If you want to be in this business for the long haul, apply proper trading sizing techniques.

Success in Forex = Learning + Practicing + Update Knowledge

Wednesday, March 26, 2014

Forex Trading, Not Having a System

 Some traders make trading decisions without any methodology or system. Imagine yourself on a trip in which you intend to drive to the west coast. If you don't study the route to take, where to rest, or you don't even know what cities or villages you are going to pass by, you will probably end up in the east coast, or on the north border, but most importantly you won’t know in the middle of your adventure if you are on the right path. On the other hand, if you know the route to take, villages and cities you are going to pass by, you will know you did something wrong should you drive into an unknown village. At this point, you will review your route, turn around and get on the right route.
The same goes for trading, if you do not use a system or methodology you won’t know what you are doing wrong until it is too late and your trading account is in great danger.
You cannot get into a trade because you think or believe the price is going to go up or down. You need a plan of action, a trading plan that will get you in and will guide you through each trade.
Imagine a trader at the end of the month; her trading account is up, the best month ever. Then she decides to go back and review all the trades made during that month. When looking at the trades she realizes there is no possible way to replicate those results because all of them were entered without any system what so ever, in a word, randomly. In other words, she got lucky. The same goes when everything goes wrong, she will not be able to discover what she is doing wrong because she is not following any system.
The most important thing about having a system is that all the rules that govern it were made when there was no money at risk. This way you are sure that every decision taken based on the system is in your best interests. These decisions are not clouded by psychological factors (fear, greed, hope, etc.) that are present when real money is at risk.

FACT - You need a system or methodology.
This will help you realize whether what you are doing is right or wrong. It will also guide you through each trade. We all make mistakes occasionally, but recognizing them gives you a chance to study, learn from and work past them. Remember, the only way to get consistent results is by strictly following your trading system.

Success in Forex = Learning + Practicing + Update Knowledge

Tuesday, March 25, 2014

Not Having a Business Plan

 If anyone saw an incredible business opportunity with almost no competitors and a great demand for a certain product, what is he or she likely to do? Probably do a lot planning before entering into that market, as most businesspersons do, or rather, as every successful business did.
During this process, the individual will probably discover things that could have gotten him or her in trouble if she or he had ignored them. And this is exactly what a plan does, prepares you for the troubles you might encounter during your adventure.
I wonder then what happens when it comes to trading. Why is it that traders commit themselves to something barely known? You probably guessed it; they want the money right now! Most traders think “Why should I plan something when I could be getting rich by the minute? Let’s do the planning some time later.” They come to the market with such unrealistic expectations, and think that success is achievable in a matter of weeks.
So, what exactly does a business plan do for me? It prepares you, for any contingency that should arise, and the most probable thing is that you will encounter a few surprises.
Take for instance, what would happen if your system suffers the biggest drawdown ever (drawdown is a chain of consecutive losing trades)? Would you quit trading? Or even change your system? Review your system and determine if the market conditions have changed so that you will have to adapt to the market? It should answer this and other questions that are essential parts of handling the business.

FACT - Trading the Forex market, as any other market, should be treated as a business, not a hobby. It will have pitfalls, and you should be prepared for them.
The most important thing about a business plan is that the decisions, observations and limits are set on it, and they were made with your feet on the ground. You will know that by relying on it, you will make the right decision. If you encounter difficult times in trading, your common sense will try to lie to you, will try to make you believe things are alright, and without a business plan it could be the end of your trading career.

Success in Forex = Learning + Practicing + Update Knowledge

Monday, March 24, 2014

How To Be Successful Forex Trader - Looking for Excitement

 Some other traders are attracted to the Forex market or any other financial market because of the excitement that is to be and be named a trader. And to tell you the truth, it is very exciting. But if this is the main reason you were attracted to the Forex market, or more precisely, this is the reason you are still trading or interested in trading the Forex market, sooner or later you will discover the most expensive adventure you have ever known.
At first, it is all excitement, but as the time goes by, and traders get more involved in the trading process, they realize it is not as easy they thought it would be. All the excitement calms down, and it becomes an obsession. At this phase, only the 5% of all traders, the ones that are consistent profitable, still think it is exciting.
Believe me, there is nothing less exciting than losing money month after month. This happens to around 90% of all traders.
I am aware most of us think trading is exciting, and there is nothing wrong with that, as long as it is not the main reason you are still trading or intend to trade.
There are many other exciting adventures that are way cheaper than trading. Analyze it, because trading, if treated this way, could be a very expensive adventure.

FACT - Yes, trading is exciting, but this should not be the main reason you are trading or intend to trade. Do some thinking on it, otherwise, you will find out the hard way as many have done.

Success in Forex = Learning + Practicing + Update Knowledge

Sunday, March 23, 2014

How To Be Successful Forex Trader-Looking For Easy Money

Unfortunately, most people are attracted to the Forex market for this reason.
All because of the publicity of:
  • Some brokers showing or rather trying to show how easy is to trade and make money almost instantly in the Forex market
  • Signals providers offering the best signals that will make you rich instantly and reach the financial freedom every trader is looking for by showing you the secrets of the big dogs.

Is it easy to trade?
Yes, it is true, everyone can do it, putting on a trade is only one click away.

Is it easy to make money?
Yes, I will have to agree with this one again, it is easy to make money. No knowledge of even what a constitutes a currency is required to make a winning trade. What they don't tell you though, is that it is even easier to lose a trade (because of the spread).
What is important here is that you cannot earn a living trading that way. In order to make a living trading the Forex market, you need to be consistent, and believe me, this is no easy task. To be a consistent profitable trader means that over several periods of time a trader makes money. Just 5% of all traders achieve this goal. Therefore, it is possible, but in no way easy.
Is it possible that a signal provider could make a trader rich? I don't think so. There are no certainties in this business; in fact, no one (signal providers) will ever care if you lose money. The only person responsible for losing money following someone else’s advice, will be you. Because you are the one who is actually executing the trades.
There are no short cuts; no one will ever make you rich but yourself. How do we achieve this? Working hard, this is the only way you can succeed as a trader.
Besides, what would you get by following someone else's advice? Nothing, following blindly someone else's advice would not give you the knowledge, the experience and nothing else good at all. Because you do not know the reasons behind any trade, you don't even know if the signals come from a system. You might make some money if the signals are good. But let me ask you another question… Do you intend to rely on one signal provider for the rest of your life? I don't think so.
So at the end, you will lose precious knowledge and experience that you could have gained by trading on your own, and most importantly, you will have lost time.

And what about the big dogs’ secrets?
Again, there are no secrets, the only truthful secret is that there are no secrets, but please keep this between you and us J 

FACT - There is no easy way to become a consistent profitable trader. There are no shortcuts, and the only way to get there is through hard work, self-discipline, patience, understanding the market, experience, taking only calculated risks, and more characteristics that we will learn throughout the course.

Wednesday, March 19, 2014

How To Be Successful Forex Trader-The Search for the Holy Grail

Many traders spend years and years trying to find the holy grail of trading. That magic indicator or set of indicators that will make them rich easily, known only by a handful of traders.
The Truth is that there is NO Holy Grail
There is no indicator or system that will make you rich easily. The best traders have no holy grail, it isn’t their system what makes them superior traders, they have other characteristics such as self-discipline, patience, they work hard, they take calculated risks, they do trade consistently based on a trading system (it does not need to be THE PERFECT SYSTEM, just a system), they follow it follow it rigorously, they know they will never stop learning so they have their mind open to every possibility, and most importantly, they have accepted the risk, they know deep in their hearts they are risk-takers.

How come there is no Holy Grail?
Because the market changes. The market is never the same, each moment is unique, patterns are just similar. If all patterns are unique then the outcome of each one of them is statistically independent from one to the other. If every pattern is different, then all set of indicators or systems will fail from time to time.
The two most common mistakes traders are likely to make in this subject are:
Most traders try many systems or set of indicators and them drop them out because they failed a few times. They never give them the time required to accurately test the system.
Another common activity is when traders start out with an easy system, when it fails, they add an indicator that could had kept them out of that particular trade. Then it fails again and they add another indicator. They end up with a very complicated system that is hardly tradable. Then they drop out the system and the process starts all over again.
The important thing here is the valuable amount of time lost in these practices. Some of them spend a lifetime trying to find the nonexistent: the Holy Grail of Trading.

FACT - There is no holy grail. It isn’t wise to try to find the perfect system or indicator that will keep you out of losing, because losing is just part of this business, like spending in raw material in any other kind of business. Instead, you can focus in one indicator/system that will keep you in the market when good moves happen. With good money management and a good risk reward ratio, the odds will be in your favor!

Saturday, March 15, 2014

How To Be Successful Forex Trader- Introduction

Most brokers agree that 90% of all traders lose money, 5% of them break even, and only 5% make money. These statistics are not that encouraging for us traders, but it is the reality.
I have good news for you though, the mistakes that cause this rate of failure are common and we have already identified most of them.
Some of these common mistakes are because they are lured into trading for the wrong reasons, and some others because they fail to work through some guidelines.
Being aware of these common mistakes and by learning to take the proper steps to deal with them, the odds will change in your favor.

Topics covered in this :
 The Search for the Holy Grail - Some traders spend most of their trading careers trying to find the perfect system and fail to realize where the key to success is.
 Looking for Easy Money - Trading successfully is no easy task, it is achievable but requires a lot of work and time.
Looking for Excitement - Being called a Forex trader is exciting, but having negative returns month after month is not.
 Not Having a Business Plan - A business plan is like a roadmap that will not only tell you when things are right but also when things go wrong.
 Not Having a System - Our job as traders is to generate consistent profits, and the only way to get there is through a trading system that fits your needs as a trader.
Not Using Money Management - MM helps us avoid the risk of ruin, but at the same time it allows us to geometrically increase our profits.
 Lack of Discipline - Having a trading plan and a business plan is not enough, we need to strictly follow all our rules.
 Not Being Aware of Human Nature - Some behavior that might seem logical on our everyday life, could be disastrous to our trading career.
 Not Being Psychology Tuned - Being aware of the most
common psychological barriers will put us one step ahead.

Friday, March 14, 2014

Forex Trading,Some Points to Take in Consideration

Here are some important points you need to take in consideration while creating your trading system.
1. Always be skeptical about your own ideas, focus only on results. Sometimes is easy to track trading opportunities, what is hard is to capitalize on them and make money from them. The performance of any trading system should be measured with actual trading (either demo or an account with limited funds).
2. Sometimes you lose even when you have followed your system to the rules. Losses are part of the game, there is no possible way to avoid them, and we need to learn to lose. So if you have followed your system 100% and took a loss, celebrate it! The only way to stay ahead of the game is by rigorously following your system.
3. Sometimes while trading large positions you can lose control of your emotions. Don't be overly aggressive with the market and follow a well planned money management technique. It should tell you what you are going to risk on your next trade.
4. Try to understand why your system works, this way you will develop the required confidence in yourself and your system.
5. There will always be some “indicator” that could have kept you out of a losing trade. But remember your system is not designed to win all your trades, but to win most of them.
6. When you finally created your system, describe it in simple and logical terms. If a 15 year old kid is not able to understand it, then something is wrong with it.
7. Use only 2-3 indicators: one indicator to identify the trend and one or two indicators or variables for entries and exits. The more indicators you use, the more complicated your system becomes. Most of the time “the simpler the system the better performance it will have”. Also use non-correlated indicators, do not choose two indicators that are supposed to measure the same market condition.
8. Test your system over large data samples (over 50 trades) and in various market conditions, this way you can see under what conditions your system works better.
9. If you decide to trade several currency pairs, try non-correlated pairs. For instance, if you trade long the Euro and long The Pound, your are likely to get the same result on both of them, elevating your risk if the market goes against you.
10. News trading? Determine whether you are going to keep your trades open during important news announcements. If you are trading for the short term you are likely to keep tight stops, and an important news announcement might hit your stop loss level.
11. While you are in a trade, open your mind to every possibility, sometimes you don't see or ignore evidence against your trade.

Tuesday, March 11, 2014

Forex Trading, Trading System Phases

In this section we will see the steps you need to take in order to create a successful system.
Once you have chosen a type of trading system (mechanical or discretional), chosen a concept and a trading style, follow these steps to create your system.

1. Historical Moves:
While looking at historical charts (the time frame you have chosen and within the concept you have chosen) identify some substantial moves. Find as many as you can so you can have a large sample.

2. Set Up:
See what all these moves have in common. For instance, you may notice that all these moves were formed after a consolidation pattern, or a technical indicator reading was always above 50 for the up-moves and below 50 for the down-moves, or the EMA(50) was always above or below the price action when the move occurred, or the market always traded above LOPS or HOPS, or they all developed at certain time, etc. Set-ups tell you the conditions that have to be present in order for the move to happen. Set-ups are a warning that a possible trade could come. Whenever you see these conditions in the future, you need to get ready because there is a possibility that your system signals a trade.

3. Determine Your Entry Rules:
Find a trigger signal that is present in of the chosen moves most (it will be impossible to find a trigger for all moves). It could be a MA crossover, a specific indicator reading, a price reversal pattern (reversal candlesticks), or it can be a combination of many, like a reversal pattern off an important level (HOPS, LOPS, PP, Fibonacci retracement, etc.), a moving average crossover when the indicator reading is at certain point, etc. Some entry points seem brilliant at first glance since you are not considering how many times your system triggers a signal when the actual move (in your favor) is not present.

4. Risk Management:
Determine at what point you are going to get out of the market because your trade isn’t working, also determine if you are going to use a trailing stop or not (if yes, what kind of trailing stop you are using).

5- Exit and TP Levels:
Sometimes your trade does not reach your take profit nor your stop loss level, in this cases you must use the same concept you used to get in the market to get out of it. For instance, if you used a crossover to get in the market, then a negative crossover will also get you out of the market (if your set-up is not present with the trigger signal, otherwise you would have to open a new contrary position), if you used price reversal patterns, then if you get a reversal pattern against you then you should exit the market. You also need to set your take profit levels. We advise to use a RR ratio at or greater than 2:1.

6. Trade Management:
Determine if you are going to trade multiple lots, scaling out, averaging, etc.

7. Money Management:
What technique of money management you are going to use?

8. System Testing

Trade your system in real time

Monday, March 10, 2014

Forex Trading, Trading Concepts

Choosing the right concept is also a large part of system development. Not all concepts of trading are good for every trader. Some traders feel more comfortable trading in direction of the trend while others feel more secure trading against it. This has something to do with the personality of each of us.
It is not unusual for Forex traders to mix concepts, sometimes traders use different concepts for different market conditions (i.e. to have a way to determine whether the market is trending or not, then choose the appropriate system).

This concept simply waits for a significant price movement then buys (or sells) on the hope that the price will maintain its trend so the trader will be able to sell higher (or buy back lower).
The trader must use a systematic approach to measure the trend. The accuracy in which traders measure the trend will dictate the systems performance.
· Trades in direction of the trend have a higher probability of success.
· When a trend is caught, trades usually make large profits.
· Trend-following systems usually have a very high RR ratio.
· It is said that the market trends only 30% of the time
· Trend-following systems usually have low system accuracy.
· Trend-following systems get whipsawed during consolidation periods.
Common strategies:
· Breakout trading: After a period of consolidation, traders buy new highs or sell new lows (i.e. using entry orders).
· Pullback trading: Traders wait for pullbacks and buy or sell off important levels (Fibonacci retracement, Bollinger lower or upper band, LOPS, HOPS, etc.)
· MA strategies: Some traders use moving averages strategies (crossover, position of price in relation to MA) to trade this systems.
· Chart patterns: Rectangles and triangles are used to trade trends.
· Technical indicator signals: Many technical indicators can be applied to this type of trading (i.e. RSI centerline crossover, CCI extreme levels, ADX, etc.)

This type of trading tries to profit from either a short-term reversal or a long term reversal. Short-term reversals are often called retracements. This strategy basically tries to buy at a reversal pattern (trend to reverse is a downtrend), or tries to sell at a reversal pattern (trend to reverse is an uptrend).
· If the signal is correct, the entry price is close to the high/low of the reversal.
· Usually high RR ratios are used in this concept.
· Trades against the direction of the trend have a higher rate of failure.
· Sometimes trying to pick the bottom or the top of the trend can lead us to have an even higher rate of failure.
Common strategies:
· Chart reversal patterns: Double tops and bottoms, head and shoulder and other reversal patterns can be used.
· Divergence trading: This signals when combined with price behavior tend to give a high accuracy rate.

Consolidation or Range Trading
A period of consolidation occurs when demand meets supply. It is also called sideways or ranging.
· It is said that the market stays in consolidation periods 70% of the time.
· Stop orders are placed close to the entry price
· Extreme volatility may occur during these periods
· Sometimes the high and low of the range are not clearly defined
Common strategies:
Indicator overbought/oversold condition: Stochastics are the most effective indicator to track overbought/oversold conditions.
Buy at the bottom of the range/sell at the top of the range: When applied in combination with price behavior, this technique usually has a high accuracy.
If you are going to trade different market conditions then it is important that you use different strategies, most trend-following strategies will fail under consolidation periods and most consolidation periods strategies will fail when a trend is in place.
Take for instance: You have decided to use a MA to determine the trend of the market. Therefore, when the market is trending (price above/below the MA) you use a trend-following strategy. In addition, when the market is not trending (the MA line is flat or close to flat) then you use a consolidation strategy.
Also, when you use a counter-trend strategy, for instance a chart reversal pattern, if it was a valid pattern and the trend reverses, then you can use an exit strategy based on a trend-following system so you are able to catch most of the trend.

Sunday, March 9, 2014

Forex Trading , Trading Styles

The trading style you choose is directly correlated to the time you are able to devote to trading.
Short-term Trading Styles
· Scalping
· Daytrading
Long-term Trading Styles
· Swing trading
· Position trading

· Traders open and close trades within a very short time scale, from seconds to several minutes.
· Scalpers tend to make many trades a day, perhaps even hundreds.
· They look for tiny profits on each trade (10, 5 or even less pips). Losses are also minimal.
· This type of trader often trade large positions.
· Scalpers often trade based on momentum, when there is a sharp move.
Time required devoting to such strategy: Scalping requires staring continuously at the screens for several hours. This strategy also requires constant focus.
Charts to look at: 1 minute
· Minimal risk per trade
· High system accuracy
· No fundamental analysis is required
· No overnight event risk
· Many opportunities each day
· Very high level of emotional stress and psychological pressure.
· Broker must have a fast execution service.
· This strategies usually have low RR ratio
· Most brokers don't like scalpers (sometimes the put them into manual execution service, a dealer execute his or her trades)
· High transaction costs. If a scalper makes 20 trades in the Euro and pays 3 pips of spread, he will pay $600 for spread on that day.
Common strategies:
· Breakout strategies (from short term consolidation periods)
· Quick bounces from support and resistance levels
· News and event trading (i.e. at a news announcement report)

· Trades are opened and closed during the day, these trades last from a couple of minutes to a whole day
· This type of trading requires a high level of discipline and patience to wait for the right moment to enter the market.
· Most daytraders base their trades on technical analysis.
· Frequency of trades can go from one to five trades a day.
· Daytraders try to capitalize from the trend of the day
Time required devoting to such strategy: daytraders are required to monitor constantly the markets to time entries and exits. Not advised for those who have day jobs.
Chart to look at: 5 minute to 30 minute
· High potential for returns
· Daytraders can use a high RR ratio
· Able to capitalize on short term trends
· No overnight risk
· There is always another opportunity to make money
· Requires a systematic approach
· A high level of discipline and patience are required to trade this way.
· Different strategies should be used for different market conditions.
· Constant monitoring of news announcements (they can produce an adverse move that could hit your stop loss level.)
· You can be whipsawed by intraday market moves.
Common strategies:
A wide variety of strategies can be used when daytrading including:
· Trading based on chart patterns (double top, triangles, etc.)
· Based on technical indicators (MA, RSI, etc.)
· Based on price behavior
· Breakout trading
· Pullback traders

Swing Trading
· Trades last from two to five days
· Swing traders attempt to forecast the medium term trend
· Positions are held overnight
Time required devoting to such strategy: Swing traders are only required to monitor their trades a couple times a day.
Charts to look at: 1 hour to 4 hour
· High potential for returns
· Swing traders can use a higher RR ratio than daytraders.
· Since trades have a longer time span, they are not likely to be caught by “market noise”.
· Low transaction costs
· Emotional stress and psychological pressure is low in this type of trading
· Not able to capitalize the short term trend
· A high level of discipline and patience is required to trade this way.
· This type of trading usually has low system accuracy.
· Overnight risk
Common strategies:
A wide variety of strategies can be used when swing trading including:
· Swing traders usually focus on currency pairs that pay interest.
· Trading based on chart patterns (double top, triangles, etc.)
· Based on technical indicators (MA, RSI, etc.)
· Based on price behavior
· Breakout trading
· Pullback traders (from medium term trends)

Position Trading
· Trades last from a couple days to several months
· Position traders attempt to forecast the long term trend
· Positions are held overnight
Time required devoting to such strategy: Position traders are only required to monitor their trades one or two times a day.
Charts to look at: 4 hour to daily charts
· High potential for returns
· Position traders can use a higher RR ratio than swing traders and daytraders. They usually use 5:1 or even higher.
· Since trades have a longer time span, they are not likely to be caught by intraday market moves.
· Low transaction costs
· Emotional stress and psychological pressure is the lowest in this type of trading
· Not able to capitalize the short term trend
· A high level of discipline and patience is required to trade this way.
· This type of trading usually has low system accuracy.
· Overnight risk
Common strategies:
A wide variety of strategies can be used when position trading including:
· Position traders usually focus on currency pairs that pay interest.
· Fibonacci levels tend to be very accurate on longer time frames
· Trading based on chart patterns (double top, triangles, etc.)
· Based on technical indicators (MA, RSI, etc.)
· Based on price behavior
· Breakout trading
· Pullback traders (from medium term trends

Which one to choose?
Every trader has different needs, resources, time and objectives. Therefore, the best type of trading is the one that best fits your needs.
For instance, if you have a day job then a swing or position strategy is possibly the way to go. If you however don't have a day job and are able to watch your charts during the day then a daytrading or scalping strategy will better fits your needs.
In addition, if you like to trade based on fundamental analysis then a long-term style will better fit your needs as changes in supply and demand take more time to be reflected in price action.
Whatever you choose, make sure it fits your needs and you are totally comfortable trading such approach, otherwise you are going to have problems trying to follow your system.